In-Depth Analysis of the 2026 Comprehensive Real Estate Tax Reform: Stronger Taxation on Multiple Homeowners and the Future of the Rental Market
An analysis of the changes to the Comprehensive Real Estate Tax under the 2026 tax reform. As taxation on multiple homeowners intensifies with a focus on actual residence and value, concerns are growing over market instability due to tax burden shifting.
A Paradigm Shift in the 2026 Real Estate Tax: From Number of Properties to Value and Residence
The government's '2026 Tax Reform Plan' signals a fundamental transition in the Comprehensive Real Estate Holding Tax system. The punitive multiple-homeowner tax system based on the 'number of properties' is being abolished, replaced by criteria focused on the 'tax base (value)' and 'actual residence'. While this aims to establish tax equity proportional to asset value, it structurally leads to an increased tax burden for multiple homeowners and owners of high-value properties.
Abolition of Heavy Taxation on Multiple Homeowners and the Implementation of a Single Tax Rate
Starting in 2028, a single tax rate table will be applied based on the total value of properties owned, regardless of the number of properties. The basic deduction for multiple homeowners remains at 900 million won, contrasting with the increase from 1.2 billion to 1.4 billion won for single homeowners with actual residence. Notably, deductions will be differentially applied based on the value ratio of the residential property, significantly reducing tax breaks for non-resident multiple homeowners.
Increases in the Fair Market Value Ratio and Tax Burden Ceiling
The fair market value ratio, a key metric determining the tax base, will be phased up to 70% in 2027 and 80% in 2028 for multiple homeowners, such as those owning three or more properties in regulated areas. Furthermore, the ceiling on the year-over-year tax increase will be raised from the current 150% to 200%. During periods of rising real estate prices, the perceived tax burden for multiple homeowners is expected to increase exponentially.
Guiding a Soft Landing for the Market: Temporary Easing of Capital Gains Tax
To mitigate market shocks from the property tax increase and encourage the disposal of properties by multiple homeowners, the government has introduced a temporary easing of the heavy capital gains tax. This aims to provide a temporary exit strategy so that properties from owners unable to bear the tax burden can smoothly enter the market.
Securing an Exit for Multiple Homeowners
Heavy capital gains taxation for multiple homeowners in regulated areas will be eased for two years, from 2027 to 2028. In 2027, the rate will be reduced by 5 percentage points for those with two homes and 10 percentage points for those with three or more. In 2028, the reductions will expand to 10 and 15 percentage points, respectively. Market participants anticipate an increase in urgent sales from multiple homeowners seeking tax savings, particularly in the outskirts of the metropolitan area.
Aftermath on the Rental Market: Concerns over Tax Shifting and Rental Instability
Following the announcement of the reform plan, the market's primary concern is the shifting of increased holding taxes onto tenants. Criticism is spreading that the increased tax burden on multiple homeowners could lead to higher rents, causing instability in the 'jeonse' (lump-sum deposit rental) and monthly rental markets.
- Accumulation of Rental Properties and Rising Asking Prices: Immediately after the tax reform announcement, some landlords choosing to maintain rentals rather than sell have been observed raising their asking prices to cover the increased taxes. While listings are increasing, actual transactions are shrinking due to these higher prices.
- Acceleration of the Shift to Monthly Rent: As landlords seek to generate cash flow to pay the real estate taxes, there is a high probability that pure jeonse properties will rapidly convert to partial or full monthly rent contracts.
Future Market Outlook and Implications
The 2026 comprehensive real estate tax reform plan will be fully implemented in 2028, following a transition period in 2027 after passing the regular National Assembly session in September. As the taxation standard for multiple homeowners clearly shifts to 'value' and 'residence', the preference for a single, high-value property will become more pronounced. Policymakers must closely monitor the potential rental market shocks during the transition period and strengthen safety nets for housing-vulnerable demographics.